What are the pros and cons of company's IPO Should company be floated Essay

What are the pros and cons of company's IPO Should company be floated at all - Essay Example Although the aim of growth is to bring benefits to the company, there exist both pros and cons that can arise from this process of going public (Helwege 2004, p.541). Pros and cons of Initial Public Offer (IPO) There are several advantages that accrue to a company by going public. As mentioned above, the principal advantage is the financial benefit through raising capital. An IPO adds a value on the company's stock. In addition, those insiders retaining stock are able to sell their shares or even use them as collateral (Datta 2000, p.715). Going public also creates a currency type in the form of its stock, which can be used in making acquisitions. In addition, there is a possibility that the company can access the capital markets for its future financing needs. Overall, a company's debt-to-equity ratio improves considerably after an initial public offering, which indicates that the business is likely to earn more favorable loan terms from its lenders (Datta 2000, p. 716). Another adv antage is the increase of public awareness of the company. IPOs normally produce more publicity by increasing the awareness of their products to a new group of potential customers. Subsequently this is expected to increase the company’s market share. The founders can also use the IPO as an exit strategy. Many venture capitalists have tried this in an attempt to open up successful companies (Hao 2007, p.112). For others, the prestige associated with the public companies or a post of a director or officer of any public company has a certain allure. Furthermore, going public puts the company ahead for promotion. The publicly traded companies are mostly better known than non-publicly traded ones. The company can gain publicity and a stable image by trading publicly. This makes the public companies offer a wide variety of stock, which has a considerable potential of significant appreciation in value. Those companies will trade publicly and portray a positive image hence attracting highly qualified personnel at all levels of management. It is possible to view such companies as growth-oriented hence their duty is to answer to a board of directors and shareholders who in turn demand increased profitability as frequent as possible, and also act quickly to solve managerial problems and also replace those senior executives who are performing poorly (Benninga 2005, p.117). Although the benefits of an IPO are many, there are certain challenges. One outstanding challenge is the disclosure of information to investors. There is a high cost of complying with the regulatory requirements. Other costs that will also arise include the generation of financial reporting documents and audit fees (Hao 2007, p.112). This will subject the public companies to added pressure of the market. This may force them to focus mainly on short-term results rather than their long-term growth. Since the investor is keen on profits, management will be under scrutiny. This may trigger the manage ment to engage in questionable practices in order to increase earnings. Another setback of going public is that these public companies operate under precise scrutiny. There is disclosure of confidential information touching on the company including those transactions with management; the prospectus divulges prior violation of security law and executive compensation. This may be confidential information belonging to the company that it may be reluctant to reveal. Furthermore, formalisation of the decision-making process follows and with less flexibility when the shareholders are also there. This may bring complexities to these companies. Previously, decision making was quite flexible due to the presence of few people. The company is also subject to

The American Plague Essay Example | Topics and Well Written Essays - 750 words

The American Plague - Essay Example Contrary to the popular perception that it belongs exclusively to the African continent, Yellow Fever is reemerging in contemporary times. Yellow Fever is a dangerous viral disease which can be fatal. An understanding of the disease’s history, causes, types, symptoms, treatment and fatality, can raise awareness about Yellow Fever and help in its prevention. Yellow Fever originated in Africa, and spread to South America, through the slave trade in the sixteenth century. Epidemics continued to plague Europe, South America, and the coastal cities of America, such as New York, Philadelphia, Charleston, and New Orleans, in the following three centuries, making it one of the most dangerous infectious diseases of the nineteenth century (Nordqvist, 2009) Yellow Fever is caused by the Flavivirus which is endemic to African arboreal monkeys. Mosquitoes serve as the primary vector for this virus. Several different species of the Aedes and Haemogogus mosquitoes, found in the tropical and subtropical parts of South America, parts of the Caribbean, and Africa,  transmit the virus from one host to another: between monkeys, between humans, and from monkeys to humans. Mosquitoes, primates and humans are the only known hosts of the flavivirus (WHO, 2012). Yellow Fever is of three types, depending on the transmission cycle. Sylvatic, or Jungle Yellow Fever, is transmitted by jungle mosquitoes, and is largely confined to monkeys. Occasionally, it is transmitted to humans, such as loggers, who enter the jungle, and is then carried by them to urban areas. Intermediate Yellow Fever is caused by semi-domestic mosquitoes, which breed both in the jungle and round houses. This results in the transmission of the virus to both monkeys and humans, and is the most common type. Urban Yellow Fever occurs in densely populated areas when the mosquitoes bite infected humans and transmit the virus to other humans (WHO, 2012). The symptoms of Yellow Fever occur in three stages. The virus i ncubates in the body of the host for three to six days, after which symptoms set in. In stage 1, the infection takes hold. This stage is characterized by headache, muscle and joint aches, shivers, fever, flushing, loss of appetite, and vomiting. Jaundice, in which there is evident yellowing of the skin and eyes, is common, and gives the disease its name. Symptoms often go away briefly after about 3-4 days, when the remission stage sets in. The majority of those affected recovers after this stage, and acquire immunity to reinfection. However, about 15% of those infected enter the third stage, which is the toxic stage. This stage is characterized by high fever and heart, liver and kidney failure. Hemorrhages of the mouth, nose, eyes and stomach can occur, leading to blood in the vomit and faeces. Seizures, coma, and delirium are other symptoms. Approximately half the patients, who enter this stage, die of the disease (WHO, 2012). The danger of Yellow Fever is compounded by the fact th at there is no treatment except supportive care. There is no cure for the disease. About fifty percent of severely affected individuals die of Yellow Fever. Treatment is directed towards making the patient comfortable, and reducing the symptoms. Fever, and other associated bacterial infections, are treated with antibiotics; blood transfusion is given to compensate for blood loss due to hemorrhage; intravenous fluids are used to treat dehydration,